Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Academic Board Chairman of the Fung Global Institute… read more

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I hope Prof. Spence will get a little further out front on the need for new statutory limits on the length of the work day to compensate for the fall in the demand for labor due to automation and new labor-saving technologies.

The eight-hour day and five-day work week were a successful response to similar technological advances a century ago.

I've actually written on the same subject - I'll be bold and post the link here: http://theredbanker.blogspot.com/2013/01/robots-labour-and-sciences-fiction.html

but, basically, I think Mr. Spence is particularly right when he says: "In fact, it is possible that we are entering a period in which major adaptations in employment models, work weeks, contract labor, minimum wages, and the delivery of essential public services will be needed in order to maintain social cohesion"

there will always be people behind the curve......the key question is if there is going to be permanent losses of jobs...everyone needs to be devising a plan for the non-employed...the non-employed remain breathing and still need a place to live, etc. ALL without every having money

Good article. In my view, the unemployment in the more developed world is bound to keep increasing due to three major reasons:- Since WWII there hasn't been any war that decimated the population, crating labour shortages, or the stock of physical capital so as to require major reconstruction;- The improvements in automation technologies first felt in agriculture, and then in manufacturing are now going to reduce the total need for labour in the service sector 8which accounts for most of the employment);- The cost reduction in transport, communication and information sharing is eliminating a major "frictional cost" that required that many goods and services had to be produced close to where they were provided, therefore more and more types of goods and services can be outsourced to where costs (and in some respects, standards) are lower;

I think the job problem can only be overcome by the development of a wellbeing economy, one where a big chunk of the work is caring for and entertaining other people. This would mean more nurses for older people, more coaches/referees in sports, more music/dance/culinary teachers, more designers of gardeners, interiors etc etc etc

To open the way for such economy, there are two major requisites: more free time - down with the 40, 50 and 60 hour workweeks - and more sharing of the wealth produced, so these services are affordable by most of the population.

I find it particularly interesting that the same genre of people from the community of thinkers, economists, et al, congratulate the progress of technology that leads companies to improve productivity and make inroads into new products and services that were not possible before, while ignoring the disruptive impact it could have on net job growth; good to see that in Michael Spence’s article we have both sides of the story. The incentives that society provides for economic growth to happen, also includes the same for job growth, but the correlation is not uniformly visible. For Japan, where job growth has stopped virtually now, we see a strong correlation with the equity markets, but in U.S. for example we have seen a relatively weak one. The import of manufacturing jobs in U.S. which is so very acute, while the export of the same from Japan, are two sides of the extreme; perhaps we could have had a more balanced approach through a mediation process that allowed the right incentives through tariffs, may be two decades back.

A significant element of the non-tradable in developed places (for this purpose, places - including some parts of rapidly developing countries - without extended family traditional support systems) is provision of community care for aged or disabled and housing and other services for disadvantaged. This becomes the major growth industry, major source of new employment in some areas of industrial decline and/or ageing population, but curiously statistical systems are resistant to inclusion of such industry in 'industry development' and the sector gets excluded from 'industry' discussion, leaving it fatally in the path of the hooting trains of politics and the supertankers of central bureaucracies.

Disintermediation is a factor impacting on community services as powerful bureaucracies firstly express preferences for minimising interaction with larger numbers of service provider organisation and secondly impose centralised call-centre culture on crisis as well as other services, to the obliteration of local skills and knowledge in many places. (parenthesical detail: consider the mental health crisis worker attending to the voice of the known local client on phone saying "I've got a knife" compared with the same worker making copious notes on a computer for a far away call centre worker to hear the same "I've got a knife" without knowing the modulations of that voice, the home circumstance of that voice, etc, while trying to read unfamiliar case notes.)

Centrist bureaucratic pressure is contrary to the wisdom of 'atomisation' of services. It ought to be self-evident that efficiencies will arise with increased skills in local workforces in the community sector and in local management (rather than wage suppression and centralised management), and in the incorporation of 'implicit knowledge' (understanding the local and the client) into the process.

I think Michael Spence's propositions are very relevant in this sector, would like to see more discussion from economists of the sector in such terms. How to do that without ideological and political bias is a big question. A first step is to see the sector as an industry and part of the economy of considerable importance to quality of life, especially in countries and circumstance of decline or absence of traditional social support systems.

Alberto Bagnai, ET AL
want the Greek government to abandon the euro – and all other eurozone members to follow suit.

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